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Closing Bell With Maria Bartiromo

News/Business. Maria Bartiromo. Analysis of the day's winners and losers in the stock market. New.

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01:00:00

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Virtual Ch. 58 (CNBC)

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mpeg2video

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ac3

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480

TOPIC FREQUENCY

Us 15, Ibm 13, Motorola 8, California 7, Boeing 7, Ntsb 5, S&p 5, America 4, Arizona 3, Boehner 3, Phil 3, Paul 3, David Garrity 3, Texas 3, Michelle 2, New York 2, Caroline 2, Jan Brewer 2, Jon Fortt 2, Joe Greco 2,
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  CNBC    Closing Bell With Maria Bartiromo    News/Business. Maria Bartiromo. Analysis of the  
   day's winners and losers in the stock market. New.  

    January 22, 2013
    4:00 - 4:59pm EST  

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balance sheets and earnings are becoming increasingly stable and consistent so we think they are teed up to outperform on a fundamental basis. >> longtime trader, overall this market, here we go, another set of five-year highs for the major averages. >> shows incredible underlying strength. we see it topping above the highs we saw in october. i think we're -- it's getting a little bit ahead of ourselves, but as you can see, the market can't be sold o.every time we take a dip, we rally. >> it's the smart money showing their hand and coming in? >> it's notion they tried to sell in the morning and looked for the pattern during the day and saw a short covering on the bell. typically more of a pattern. a lot of day traders are looking for a pause to move up, to the highs around 14,000. >> yeah. you think we go higher? >> every day we do this, build more credibility for equities, and that's a major positive. >> brian, terry, good to see you both. >> thanks for joining us. as we head towards the close here. the dow near the highs of the
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day. stand by. the stone for tomorrow will be set when we get earnings from google, ibm and texas instruments. and when that happens as we get under way now with the second hour of the "closing bell." >> it's 4:00 p.m. on wall street. i'm michelle caruso-cabrera in for maria bartiromo. the dow and s&p closing at another five-year high. google set to release earnings any time now. dow jones industrial average down by 58 points and the highs of the session, 13,70 and nasdaq higher by 8.5. 3,000143. a gain of a quarter percent and the s&p higher by a little more than six points. 1492. a great year to discover america. bill. >> it was. let's get ready for the earnings. google and ibm out any moment now.
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get the numbers and a panel of analysts ready to tell us what they think. paul and gary will be watching the numbers when they come out. cnbc contributor michael yosikami and joe greco of meridian equity partners joining us in just a moment. michael, let me start with you. you bullish? >> yes, i am bullish. i see no reason why the markets should not continue to go higher. interesting to see the numbers kemg out of google and ibm. an indication of the strength of the global economy. yes, obviously, the fed is juicing this real, but cash on balance sheets is at record highs. unemployment seems to be stabilizing, and have you nowhere else to go, if you go to cash, what are you making, nothing? >> nothing. >> go to bonds, nothing. >> might as well put it in the mattress. >> exactly. >> watching google there. waiting for those numbers. not out yet. estimates coming down. rich peterson what, role does technology play in this market right now? how important are they?
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>> it's always the audio. >> in terms of the s&p capital estimates, looking for a 1.4% decline and earnings in the fourth quarter. however, you look at the low point for the earnings decline for the sector we're seeing upturned in the first quarter, second quarter 2013. however, i think, you know, we had a big rise with many m & a deals last year in the sector. investors should not be ignoring the risk out there. so far the s&p 500, so many headwinds out there in terms of what the fed may be raising rates some time. >> okay. so you see technology earnings bottoming here and maybe getting better from here. still, going sob some volatility. >> have we got joe greco? >> glad you're on because every
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guest we've had on today is bullish and that makes me nervous. usually a bad sign. >> same here. >> you are bearish. tell us why in. >> out of blocks the market is fantastic, but i keep scratching my head as to why, a lot of headwinds. >> the fed is printing money, everybody in the whole world is printing money. >> seriously. everybody is printing money. no guidance that says things look fantastic. there's guidance saying there's troubled waters ahead. we'll keep our positions, won't go up on a hiring range. there isn't the type of activity you would have expected given the market's move. >> you guys are not interrupting the audio so i can't give it to me right now, there they are, $12.16 billion, the fourth-quarter numbers from google, lower than what i had here. this market was expecting 12.34 billion. >> when you include motorola home you get close, right, or is that telling us what the
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estimate was including motorola? >> the estimates have the analysts include the motorola home division which the company sold last year. google is reporting earnings that do not reflect the home and have to add them back in. >> do we have jon fortt standing by yet? >> all right. still crunching the numbers for us. >> motorola home did i rigs is the set top box division that they just sold. >> paul meeks, let me bring you in, if you've got any feeling about google and what to expect. as we said, the market likes what it hears so far. google up 3.33% in the after-hours market. it's a good question. the way i look at the revenues they just reported, maybe it's a very, very slight miss, but i don't think it's relevant. i would like to see more, however, about the eps. >> all right. we hope to get those soon here
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for you. david garrity, what are you looking for from google right now? >> i think, you know, the details that you have as far as revenue numbers are concerned are probably in line, as paul indicated so from that standpoint reassuring. the thing i want through the details is if we can look at what desk search did in the fourth quarter. that's been their high-margin search channels that has been under attack. need so see some intercations of what the core strength of the business is. obviously 3% up spells a lot of relief right now. let's go to gone fortt to see if he has those numbers for us. >> analyst had all sorts of different things they were factoring in but not factoring in. a mixed bad of numbers. costs per click were down just 6%. a lot of people were worried it
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would be down more than that. actually up 2% from q3. that's good news. paid clicks, however, up 24%. a lot of analysts i had seen expected paid clicks to be up above the 30% range so that's not so great. the motorola loss this quarter is $353 million. remember, it was over 500 million last quarter. still a significant loss. not as bad as last quarter, wouldn't expect it to be as bad because q4 is a big hardware quarter. also will point out cash is above $48 billion and the head count in the google unit is up. in the motorola unit it's down by about 1,000 folks so kind of even on the head count. google a little more than a thus and down in motorola. even if you count the home business about, take out the home business, down a lot more. let me ask our earnings mavens
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in the booth here. does that put motor ola back in, apples to apples comparisons with the estimates now, anybody? >> too soon to tell. >> it does not. >> still waiting for the bottom line number. again, the estimate was $10.42, but it's a very messy report because it either does or does not include a division that they sold in the last year, motorola home. >> david garrity, you heard jon fortt go through a lot of numbers, paid clicks up 24% and below expectations for folks. another loss for motorola. the thing i got encouraged by was cost per click was up and not down as heavily as it would be. to my reading that maybe shows the desk top service may have held up better than feared. >> paul meeks, what do you want
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to hear from -- >> i would like them to be at least in line with the guidance. looks like the numbers they just developed and all the metrix that john pointed out were as i expected and this is a company that missed on an eps basis a september quarter by 15%, and then the stock got whacked thereafter. a probably encouraging report followed by probably encouraging guidance. >> lost way he says guide as. still working on the numbers, folks, because it's a messing report. we'll discuss the markers in a broader sense and then we'll look at what the numbers actually move. >> joe dwreko, standing by still? >> yes, yes, yes. >> what do you think trends. people trying to lean into them a little unsuccessfully and
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trying to take south korea out of their names and trying to do it in google has met with -- with nothing on the good side. clearly the some is performing better. partially i think a little bit of the squeeze and partially because you can't compare entirely google to apple or google to fook. they are competing with google. google invests in their people and technology and a lot of the google technology. spot an analyst at the company as all, with you the end of the day they have a real idea of what things are going. >> ibm revenue number, 29.36 billion so it looks like the revenue is coming in slightly above expectations and now the numbers 539 versus an estimate of 525 so that's looking like a solid beat. >> another 3% gain for that stock now, too. >> a very nice move in the after hours. >> bodes very well for global growth. that's what ibm is about, their
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services contract and how much they are able to increasing gdp around the world. >> i like it a lot and one of the rens i do such. the revenue number. always buy ems because they buy back shares. today we see it beaten. >> witch seen, 47 of the 74 tops companies that reported had beaten consensus estimates. this only adds to that beat rate. again, it shows you corporate america is endeavoring to make profits in a very challenging environment. you heard yesterday the lack of any talk of fiscal restraint. we know regulations, taxes are going up 2013. kudos to corporate america for pulling in these numbers in this environment. >> how about david garrity?
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you want to weigh in on these numbers. >> 4% gain on the stock. >> on the ibm numbers, fear there would be around the conference call four years ago. their main stram, which they just launched to september saw good acceptance in the fourth quarter and all the concerns that people had about corporate investment and all that because of the fiscal cliff issue, tax reform. obviously these being put bait by what numbers are being put up in terms offing revenue strength. ibm a good bellwether versus tech bjorklund and paul, david, thipg thank you. my friend snow greco, when do you think in the market will go
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higher? >> i'll just plead the fifth on that. >> all right. i hear you. thanks for joining us. michael, rich, always good to see you. >> thanks, guys. >> to wrap up, ibm's solid beat on the bottom line and top line better than expected. >> google. top line. bottom line, we're working on it. coming up next, back with more clarify on the going poll numbers and boeing's problems are not getting better. neither is stock. phil phil mickelson making a big change for himself. others will follow. we're going to take a look at that coming up. (announcer) at scottrade, our clients trade and invest
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for foster children, big and small. bring your gift to any sleep train, and help make a foster child's night a little cozier. not everyone can be a foster parent, but anyone can help a foster child. all right. after the hour's earnings, ibm solid beat. stock higher by a little more than 3%. google, still going through the numbers. we think the revenue number was slightly light. >> market likes what it hears here. >> the stock is up 4%. >> the market is voting. >> again, and i suspect they are waiting for guidance now as well. right? >> yeah. that's what we heard from those two analysts a moment ago. >> they want to hear what's coming. some of the potential headwinds, a lot of competition in their
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core areas of search. how the android is doing, so, you know, we'll wait to see what google's guidance is for the future as well. right now both stocks trading smartly higher. >> boeing shares though, losing altitude. bernstein research estimates the grounding of the 787 dreamliners could cost boeing up to $350 million but also adds this a quick fix could cut that estimate down. >> phil lebeau, a quick fix is looking for dicy at this point, isn't it? >> yeah, bill, still got more questions than answers at this point and today the ntsb fang out around the country and the globe trying to get more answers. in tucson, arizona, ntsb along with members of boeing were down at a company called secure a plane. owned by its corporate plane out of london. they make chaernlgs for the lithium batteries down there doing some tests. the ntsb with boeing investigators out in everett, washington, where they make the dreamliner. they have hundreds of employees at boeing in everett working on the 878 problem, and they are in
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teams trying to do what you would want to do here, do a test. try to figure out if there's some common theme here. and finally in japan, japanese investigators, along with investigators from the ntsb, they are looking at the battery from the ana dreamliner, the ntsb said that battery was ore charged, different than what was said about boston taking a look at boeing since the incident on boston on january 7th. still more questions than dreamliners. >> you know the ceo of the company has to be saying what's next? >> so tough. >> the badly named dreamliner has been a nightmare for him and his company over the years. phil, stay with us now. let get more now on the boeing fallout. a maintaining of the outperform radar saying all of this will be a blip.
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>> the supply chain companies that they deal with, a bullish outlook. why are you still bullish when we don't know how long this plane is going to be out of commish? >> don't know exactly, but we do know both batteries, both had a short circuit problem so i think there's a reasonable chance it was a manufacturing defect or procedures defect in terms of the way they charged the battery. >> so you maintain your stance on the stock is based on your assumption it a this will get solved sooner rather than later. >> i don't know what sooner means, a couple of weeks, but i think do i believe that the boeing company is capable of finding out what happened and fix it, i think they can do it. the dc-10 had three crashes. at the time people were worried about the design flaws. all of them turned out to be in
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some way maintenance defects, so i think there's a reasonable chance at the way they are using this and people don't understand all the implications and you can make some changes there and correct can. michael lewis, why do you think it will have a material impact on earnings. there's three major issues at home. the first with the battery, was there a nermal runaway incident and, second, what's the reap cautions to the supply chain if the groundings occur over a longer period, and, third, what's the implications for financials for boeing and these are all implications like, near-term events, and we don't expect we'll see this over a long-term period so there are investors in this stock three to five years. this is going to be a blip on the screen and longer term i think everything will turn out okay. >> i don't understand when you talk about the impact on the supply chain because you're worried that some of those
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suppliers may go. i don't understand? >> what we mean here is this. let's say that the production goes into a standstill if the grounding takes a longer period of time to be remedied. >> that's the issue. >> and if the supply chain needs to come to a stop, it's harder for the supply chain to come back onlinehan it is to make it stop abruptly. that's the issue. >> why in the world wouldn't have have a material impact on earnings though. >> it would, but not in the near term. we're talking about repercuss n repercussions that will happen over three or four quarters. >> it's a major pr problems, yet another string of problems they have had on this dreamliner. >> they are worried about the problem rather than let's get this resolved and back in the air. i mean, ultimately, they have been beaten up over the years regarding public relations problems with the drain, and i think at this point from talking with people in the company, they are past that. they are now more focused on
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just let's get this resolved and let's go there. >> yeah. because public relations problems come from real problems. >> yeah, and then they have to assure the public that this is a safe jet to get on. >> bill, at the end of the day, go back through the history of aviation, it's very hard to find examples where the public says i'm not getting on that plane. now, there are a few examples, valujet is an example, not because of the plane but the company running the airline. if they get this resolved, you'll look back on this in five years, there will be comments and specifics but you won't see pilot stop flying them. >> all right. guys, thank you. >> thank you, gentlemen. thanks, phil. must be a long day there. see you later. >> a quick check on how investors are reacting to earnings reports. one more to go as well. courtney reagan has been working the into of the new york stock
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exchange today. security? >> still trying to get to some of the details from google. still waiting to hear from the company, but at least as of right now the market is definitely liking what it's see when it comes to the google shares bidding them higher in relatively higher hours. beat on the top and bottom line and guidance pretty strong for google and the lange-term view, on a track towards a long-term road map, operating $te ining d. right now both of these stocks are higher after hours. >> okay. and we're now -- we're now getting -- >> an apples-to-apples number. >> what we showed before, the non-gap number of $10.65 which is a sol id beat. where the expectations actually had come down today. >> right. >> to $10.42. beats the number by a wide
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margin even though we think the revenue number came in slightly light. >> but i think the reaction that you're seeing in the stock so solidly higher after hours is because sharply higher because, are, this is a company that a quarter ago missed. there's probably relief in there as well. >> we'll see what the word is from the conference call when that gets under way, but at this point the stock is up 3.7% in the after hours session and we now wait for texas instruments to report. house speaker boehner set to hold a news conference in less than an hour. >> expected to tee off a vote on the debt ceiling bill. what's their new plan? we'll go live to washington next, and even with the immediate threat of the debt ceiling ahead, another's contrarian view coming up. >> chip murky's quarterly result
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are due out now. those numbers coming up as we continue on the "closing bell." . ♪ into a scooter that talks to the cloud? ♪ or turn 30-million artifacts... ♪ into a high-tech masterpiece? ♪ whatever your business challenge, dell has the technology and services to help you solve it. there. i said it. they don't have pictures of my kids. they don't have my yoga mat. and still, i feel at home. could it be the flat screen tv? the not so mini fridge? ♪ the different free dinner almost every weeknight? or maybe, it's all of the above. and all the rest. am i home? nope. but it almost feels that way. homewood suites by hilton. be at home.
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all right. they are teeing off this new debt ceiling bill. john boehner will be housing a meeting with key republican leaders at 5:00 p.m. eastern time. >> reporter: >> that's coming up and john harwood is here with a preview before that meeting. >> reporter: interesting to see how john boehner describes it, but there are some signs that the whole debt ceiling threat as a source of instability for
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markets and the economy may be melting away before our eyes. house republicans are going to take up a bill tomorrow afternoon to extend the debt ceiling, not just to april 15, but to may 18. they are going to do it with a mechanism that would allow them in effect to suspend the debt ceiling, not even to raise it making it easier for conservatives to vote for it and senate democrats say they plan to take up that proposal and expect to pass it by an overwhelming margin sometime within the next week or so. now, jay carney at the white house today for his part said we wouldn't a longer term extension than that but the president is not going to block this if it clears the congress. here's jay carney. >> the bill still has to overcome some concern expressed by mums of the house and senate before it can pass both chambers and reach the president's desk. if it does and reaches the president's desk he would not stand in the way of the bill becoming law. >> the bottom line, of course, is that having broken the link
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between specific spending cuts and specific dollar increase in the debt ceiling it becomes easier for congress to shift the fight over spending and taxes and revenue on to different ground. of course, the quester and the -- the continuing resolution to fund the government, but you're hearing some of both parties saying they might even accept the sequester. some of the stakes appear to be fading from these disagreements that paralyzed washington at the end of last year. >> when i heard this original deal profrksd i thought it was on the condition that the senate eventually congress had to actually pass a budget finally. >> that's still on the table. >> that is still on the table. a little bit less clear is the fate of the idea that somehow pay would be suspended for members of congress if they don't pass a budget. >> right. >> there are questions about the constitutionality of that provision, but the entire provision is to try to force the senate to force a pass a budget, and the senate intends to do that. >> that's significant because
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it's written within the law that when you pass the budget the debt ceiling automatically gets raised and then you don't even have to have this discussion at all. even before the debt fight was pushed off in the spring the equity markets were off to the races, dow and s&p 500 hitting five-year highs. >> again today. the sixth time in a row? >> something like that, and this is just what worries scott stewart of sage view capital. >> scott's firm invests in public and private markets saying the public markets are too complacent and a pullback is a very, very big risk. what he's doing now to make money. good to see you. yes, there is no fee in this right now. the one gauge of year is at a multi-multi-multi--year low and the effect of liquidity is central banks. how markets trade stock. why are you willing to fight that? what we do is have a long-term
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committed capital pace, know our sectors well and wait for good opportunity to come along. i expect there will be volatility, as the european financial crisis gets dealt with, so we don't get paid to decide when the volatility will come but get paid to be ready. >> the number of analysts said today they see the current market very much like it was in 1982, a new generational kind of bull market, an emergence of the u.s. economy and the markets again. do you see that? >> you know, we're not experts at forecasting overall market movements. we're looking for individual positions. there are a few needles in the haystack today but more needles in the haystack. >> you're waiting for a pullback. you just missed this move. >> meantime, very interesting opportunity on the private said.
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>> talking the private said, limited equity group. my partner and i spent 20 years at kkr and that was a great business. there are out there and growing and what we do is invest behind good management stakes. >> that's stuff that's not publicly traded? >> that's right. >> so do you have advice for viewers without that option? >> i think. sure. in the public markets we take a long-term view and do deep fundamental analysis and we wait, and it's okay to be in cash while you're waiting for a good opportunity that may come along. >> you're not worried about new regulations, you for example some of the taxation industries that are plaguing some industries right now. all the headwinds people raise
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the issue and have reason to be concerned. we have two banks. no one is in the country that thinks banks aren't regulated but we think if you give capital to those kind of entities even in a regulated industry, you can do quite well. >> decathlon coming up, the fifth year you would be doing it? >> yes. the rbc decathlon, all the competitive men and women from wall street, compete in athletic endeavo endeavors. their friends bet on them and then all the money goes to find cures for childhood cancer. a terrific event and hope everybody watching today, including the two of you, will compete in this event. >> bill will do it. >> michelle is great at decathlons. guys on wall street, like to bet? who knew that. >> appreciate is very much. texas instruments is out with
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her innings. bertha coombs with the numbers. >> we've got texas instruments reporting earnings of 36 cents a share. that's excluding restructuring charges, and that compares to a 34-cent on that apples-to-apples expects. its revenues topped expectations as well at $2.9 billion. much more than the expectation of 2.9 and higher than what the company has done. it's on its outside. consensus earnings for 34 cents a share in the first quarter and also in terms of the revenue, a little bit light as well. 2.69 billion to 2.91 billion. analysts looking for somewhere in the range of 2.76 billion to 3.2 billion or so. you can see shares there. a little bit of disappointment.
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this will be the fourth straight quarter, michelle, that their outlook has disappointed. back to you. >> yeah, and you can see the movement in the stock us a pointed out, bertha. thanks so much. frustrated about higher taxes? so is golf pro phil michelson who suggested, quote, drastic changes ahead for him because of tax pain. we're going to discuss whether rich people are really moving to avoid the tax man's blow. next. >> we have certainly stories on that. >> litter, a super conservative governor raises taxes to fund her state's responsibility for the new health care law. stick around. could happen in for states as well.
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you've probably heard by now golf phil michelson has apologized for those remarks that he said over the weekend when he said big changes would be coming in his own life due to his rising tax rate in california but didn't go so far as to say those changes were not coming with that apology. brian schactman has that story. >> well, you know, phil said he'll have to way a rate in the low 60s. that's a good golf score but a pretty tough tax rate. most think that projected rate is way too high, but just the prospect of it had phil talking after a 37th place finish at the
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humana challenge in california. he said, quote. i happen to be in that zone that has been targeted both federally and by the state, and, you know, it doesn't work for me right now so i'm going to have to make some changes, end quote. those could include leaving california which now has a 13% income tax rate, leaving the country and maybe even aband abandoning the game of golf. this is a guy worth at least $150 million who made almost 50 last year alone. almost 4 million of that from actually playing government the rest was endorsement money. today he backtracked telling cnbc in a statement, quote, finances and taxes are a personal matter and should not have made my opinion on them public. i apologize to those i have upset or insulted and i will not let that happen again. his squeaky clean image took a bit of a hit. in a country where the median household income is $50,000. >> we still love phil, the most popular guy on the tour, by far.
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>> and he would know. phil mickelson's tax issues raise aid lost questions. will higher taxes prompt a lot of wealthy americans to lose. >> both sides of this. lindsey says this is exactly what happens when the government continues to raise taxes. also with us is our wealth reporter robert frank. let's do the math very quickly. when phil says his tax bite would be 62%, who is telling me now? >> you talk to any accountant. i talked to a lot of accountants today who worked with professional athletes and they say, really, there's little chance that mickelson or any athlete is paying more than 50% to 52%. even look there, that is a lot of taxes, and we have to keep in mind that for shows who take a shot at him or not, his tax rate, along with other californians, has increased 7.9% over the past three months. remember, california passed that increase proposition 30. that added 3.3%, plus that new federal tax rate, so 7.9%, so
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there's a lot of wealthy people in california, maybe not as rich as he is, who are thinking this same way and have a lot of sympathy for this type of argument. >> lindsey, how do you think rich people behave when they are confronted with taxes like this, they move? >> i think the average person has a hard time feeling sorry for a pro athlete making 50 million or 60 million a year and his comments speak to the broader issue and what we'll continue to see in this country if we see the tax burden fall on the most productive and wealthiest americans in the name of equity or fairness. certainly we know 0 or 100% tax rates, the federal government is going to get zero revenue. it's in between those two end points that things change. as we start to make individuals minority partners with the government. at this point there's less of an incentive to work, earn and invest. now, michelson, of course, is saying around 60%, but if it's 55% or 62%, there's a substitution effect. the marginal burden increases, individuals are going to substitute potential income-earning hours for more so what we'll see --
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>> robert, so many people -- robert, so many people have moved to florida for at least six months and one day so they can escape new york taxes. i mean, millionaires move, right, and they can because they can afford to. the rest of us can't. we're stuck. >> they do, and it's funny. hear a lot of the stories and know a lot of people who move, whether it's california and new york. here's the interesting thing. when they do academic studies and really scientifically look at the effective tax rates on migration of millionaires, they found that in california the migration that was tax-related was only 1% of the total millionaire population. the 99% was related to people falling in rand out of that income group so when you look statistically you don't find evidence that people move for tax reasons. >> actually i have to disagree. >> this time may be different because we have a whole different set of numbers but the academic research shows it's a very small number. >> got to interrupt. got to hit the commercial break
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because we need -- we've got to stop though. thanks, guys. >> okay. >> yes, we have to go to bertha coombs with this news break. bertha. >> wells fargo shares if phil does, might be getting a bigger paycheck. the company is increasing its quarterly dividends three cents, 14% to 25 cents per share. the company said in a statement that the increase is part of a capital plan that received approval by the federal reserve back inform 2012. 2013 plan is currently being looked at. as you can see there, wells fargo raising its dividend by 14%. bill? >> bertha, thank you very much. sticker shock at the emergency room. hospitals may get hit with higher taxes thanks to states trying to figure out ways to expand medicare under obama care. and guess who is going to get stuck paying for it at the end of the day? our heated debate on this touchy issue is next. >> later, leaner and meaner. with federal spending cuts in the offing, our jane wells runs
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actually a big woundful. they get more federal dollars back for every dollar they use. >> occidental college professor carline heldman says brewer's tax hike makes perfect sense but paul howard says brewer and fellow governors should say no to higher taxes. welcome to boast you. caroline, why is governor brewer right in raising taxes to cover the cost of expanding medicaid in her state? do you think other states will follow suit? >> they certainly will follow suit. in fact, they have already followed suit if you look at what's happened in the past ten years. 21 states had this same provider tax in 2003 and now 49 states have this tax. what they are doing is drawing down federal dollars so the health care providers are actually getting more back than they are putting in so it's not really a tax. that's just creative bookkeeping n.jan brewer's case, in arizona, we're talking about a $155 million investment in order to get 1.5 trillion back. it's a 10-1 return on
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investment. >> paul, do i understand this from what jan just said? so the hospitals in theory are going to get more money because they are going to get more medicaid patients, so now we're going to tax them on the money that they were going to receive, right? i mean, isn't that just a big old swirling pot of money going around and around? makes no sense. >> i think the technical term is a shell game actually so what you have is a gimmick where the state taxes the hospitals, gets more money back from the federal government and keeps some of it and sends it back to the hospitals. the tax is also going to be paid by private insurers and private patients who will get hit for that. also a cost shift. arizona has enormous medicaid problems. had to freeze its medicaid enrollment in 2011 because of costs, 10% of the general fund budget so she may say this is a drop in the bucket but when you're drowning, a drop is a lot. >> caroline, if states get more money back from the federal government to pay these health care providers even more than what they paid from the higher tax, where's the savings then? >> the savings comes long term,
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right, so with the affordable care act in the first decade, the congressional budget office is projecting $210 billion in deficit reduction, and then in the second decade $1 trillion, so it comes. >> hold on, hold on. the deficit reduction comes because they raise taxes and they cut medicare. had nothing to do with medicaid, right, and the states themselves have to deal -- i mean, we all talk about what it meant for the individual but there was another part, medicare that got stuffed down the throats of the states and they have to take -- they have to spend this money at the -- >> they don't have to do it, right. the supreme court ruled they could opt out which is what governor perry is doing and bobby jindal is doing in louisiana and what's happening in south carolina, and those are governors. if you're a governor and you're looking at this, it makes perfect sense for you to take this because it does draw in, again in, jan brewer's case, ten times the amount of federal funds, so if governors are choosing to not do this, then it is a partisan game because it makes no economic sense. for them their self-interest is
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to do this. >> but for a program that -- that the president has admitted, everyone is admitting spending too much money, we have potentially 30% of the health care in america is not spent on value added in care, we'll spend more money and that winds up saving more dollars in the long term is nonsensical. >> you can't argue with the congressional budget office' figures. >> you can. >> they are not related to medica medicaid. >> of course, they are health care costs, part of the affordable care sglakt if you're not bending the curve, if you're increasing revenues and spending more on health care you're not bending the curve. >> that's not true. it costs one-fifth. if you provide health care to people, if they go to the e.r., you're saving five times more of the cost if you get them care up front. >> most of the cases at the e.r. are medicaid patients. >> don't have full coverage so they are concerned about going in for full procedures. the expansion of medicare len courage more people to receive
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preventive care. >> paul, last word, got to go. >> last word, this is going to be a raecht tchet up. >> they are not costs. arizona may take a little hit from just this part. they are going to take a big hit from everybody that's eligible today. >> thank you so much. >> thank you both. all right, wall street going on the defensive. our jane wells previews the lineup of defense earnings that hit first thing storm morning. and house speaker boehner holds a news conference in just a few minutes. we'll bring that to you live. do not touch that remote. so i read the average couple loses 155 thousand dollars of their 401(k)s to hidden fees. is that what you're looking for, like a hidden fee in your giant mom bag? maybe i have them... oh that's right. i don't because i rolled my account over to e-trade, where...whoa...okay... they don't have hidden fees... hey fern.
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defense earnings in the spotlight this week. tomorrow morning. jane wells previews the action tonight. jane? >> michelle, defense has been great. lockheed and north are up. but analysts expect all companies to prevent lower fourth quarter earnings compared to a year ago. jeffrey says the quarter marks a slight deceleration in growth. we could see groument rates level off this quarter and accelerate in the second half.
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that's because many companies are seeing growth in international sales which is good for margins. >> margins have been very res resilient here. expect them to continue to do that. internationals got higher margins. as well as more weapons sales opposed to weapons development here in the united states. >> most of the focus will be on lockheed martin with a brand new ceo, who says the f-15 is per personal priority but a pentagon report says that the expensive jet missed some test objectives in 2012 and one variant might have a fuel tank that explodes if lightning strikes it. goldman sachs has high expectations for lockheed, 2013 guidance above the street and fourth quarter earnings of $1.98. that's 18 cents higher than consensus. back to you. >> jane, thank you. the earnings parade picking up first thing tomorrow morning. >> our panel of market pros will tell you what they're watching for us, so, stick around for that, coming up. y, buddy? oh, hey, flo.
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good to see you. ron, let me start with you. 30 seconds on the clock. what are you watching? >> the opening tomorrow is going to see google higher, going to see ibm higher, going to see the nasdaq higher. google reported, ibm reported just a few minutes ago and the numbers were good, especially for ibm, but google looked like they had less loss from their per click revenue than was thought. so, i think that's going to be a really good sign. the other big mover is going to be boehner. going to be this whole proposal to extend the debt ceiling by four months. i'd like to see some teeth in it, but guess what? >> all right, time's up there. chad, let's go to you. 30 seconds, what do you expect tomorrow? >> two things for tomorrow. watch the imf. they are going to come up with their economic update. they're going to revise global growth lower for 2013 but up the estimate for growth in china. also, watch guidance from google and ibm after the close as well as apple's earnings and coac